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National Insurance (NIC)

National Insurance (NIC)

No big giveaways, but a couple of small announcements tucked away alongside some previously announced upcoming changes:

National Minimum Wage (NMW)

From April 2017 the NMW rates are:

  • employees aged 25 and over £7.50
  • employees aged between 21-24 – £7.05
  • employees aged between 18-20 – £5.60
  • employees aged between 16-17 – £4.05
  • apprentices up to age 19 or in their first year of apprenticeship – £3.50

The above minimum wage rates are legally enforceable.

From April 2017, the National Living Wage for those aged 25 and over increased to £7.50 and is expected to rise to over £9.00 by 2020.

National Insurance Contributions (NIC)

The Government had previously stated that Class 2 NIC was to be abolished from April 2018 onwards.  However, in a time when the tax liabilities of the employed and self-employed are being aligned, the abolition of Class 2 NIC will make the difference between the two even greater.

To counteract this, the Chancellor today announced that Class 4 NIC (which is a charge on self employed profits), would increase up to 10% from April 2018 and again up to 11% from April 2019.  Although this will add to the tax bills of the self-employed, these contributions now count towards the new State Pension, which will see the self-employed better off when they come to retire.

From April 2017 the threshold for paying Class 1 NIC for employees and employers will increase up to £157.00 per week.

Employment Allowance

The Employment Allowance has remained at £3,000 for the 2017/2018 tax year.

Apprenticeship Levy

The Chancellor announced from April 2017 the Apprenticeship Levy is £15,000 per employer with a levy rate of 0.5%.

This new levy will only affect your business if your employees cost £3 million or more each tax year.

Parental benefits

The Chancellor announced that the Government will consider if there is a case for greater parity in parental benefits between self-employed and employed individuals.  Confirmation of any changes will be provided in the Autumn Statement.

If you have any questions on National Insurance or payroll matters our specialists are on hand to help, give them a call on 01228 711888.